How I’m Adapting My Online Arbitrage Business in 2018

I want to give a special shoutout to 2016 for bringing online arbitrage into my life. It came to me at the perfect time; right as I had plenty of money to invest into something, and I’d freed up time from other projects to try something new out. I’ve played around with online arbitrage for the past couple of years, and I recently decided I’m going to do a few more things with Amazon in 2018.

However, those plans are likely to be a lot more effective if my online arbitrage business continues to grow.

A few months back I went through all of the things I learned in my time doing this business model. Writing them up reminded me of just how much had changed since my days of scanning lots of random aisles in Sainsburys in the hope that I would find gold. Now it’s time to go through the things that I know I need to do more of if I’m really going to take things up a level (or three).

1. Incorporate More Retail Arbitrage In

Retail arbitrage is still viable in 2018. I’ve overheard staff at my local Tesco say “That’s the guy that comes in every week and buys all the shower gel”, and I’d like to have that reputation with a few more products. I know for a fact there are hundreds of profitable grocery products I just haven’t found yet in supermarkets because I just haven’t tried hard enough.

It’s easy to find the deals when they’re discounted, but among the thousands of others, not as easy when they’re not. I’ve got a good 15 different things I can flip from every Tesco trip. Mostly Health & Personal Care and Beauty, but also some Baby and Grocery ones. I need more. Software isn’t great at finding these opportunities, because they tend to be bundles, but I’m going to get to the stage where I have a hit list for all the major supermarkets.

2. Diversify Even More

When I wrote about the 18 things I wish I knew before I got in this game, diversification was a major point. Nothing has changed. I keep getting comfortable in different places and I spend a bit too much time with them, when I really need to just blitz it and try a few products in absolutely every category I can. Even though I’m a lot more diverse than before and I’ve stuck to my guns in succeeding with less than 5% reliance on Toys & Games (where many start), I know there’s more that can be done.

I’m ungated in so many categories and subcategories, so there’s no excuse for it. Just need to do the research and crack on, as I did with the rest.

3. Conquer Europe

I have properly slacked with European listings. I heard so many horror stories about both the French and Italian marketplaces that I didn’t think I should ever bother with them. Then I heard about people that almost exclusively buy on Amazon UK to sell to European Amazon marketplaces, so I had to list everything on them. Now I’m there, I need to make more of an active effort to find the products that sell unusually well elsewhere and price them accordingly. Setting a global rule of a particular price adjustment doesn’t cut it.

4. Lower Returns

Amazon only gives you 60 days of data for returns, so I can’t tell exactly how many returns I get, but I know that I want less. Every time one of those emails comes through, I’m just hoping it’s on the lower end. (Once I had a £107 product returned). I know it’s part of ecommerce and especially true when you’re dealing with Prime customers, but I’d just prefer to have fewer. Fortunately, mine tend to be returned in a sellable state, but it just messes with the flow.

So how am I going to do it? Well I thought I could combat it by selling perishables and cheaper things in general. It turns out that people will even return £6 grocery items, so it’s not exactly true. I mainly just need to pay more attention to the things being returned multiple times to see if there’s something in the listings that isn’t being lived up to in person.

5. Get My Feedback Up

In the early days of my Amazon journey, I was stressed because feedback is very different to eBay. There, I was looking at a good 70% of people giving feedback after a purchase. For my first few months, I literally got one feedback per £1,000 sold. It’s changed increased since, but the ratio still isn’t great. I’ve been eyeing up the Bqool feedback solution for a while, and it’s about time I brought it into my life.

6. Up My AOV

My average order value this year has been £19.43. From what I hear, that is already quite high. It will benefit to keep pushing it up though, as it means that I won’t have to source as many products for the same return. That said, I was playing a risky game Q2/Q3 this year, as I bought a lot of products that sell in the £60-£100 range. I had a few major wins with things over £150 too. Most of those were real slow sellers, so locking my money up in products that take two months to sell instead of two weeks can really slow the business down. The £107 return (discussed earlier) got me shook and I’m a lot more careful with my higher priced picks than before.

7. Get Another Box Destroyed

I don’t know how I forgot to cover this on the blog, but last summer Amazon mashed up one of my shipments containing over £600 in goods. Something went wrong in their Inverclyde FC and my stock was unsellable. I would love to do that again, because it meant they just dropped the whole value of the shipment into my balance (on my Amazon payday!). Crazy sell through rate.

To be fair, I shouldn’t wish for things like this. I was fortunate to be deep in the game, where I could afford for that £600 to just vanish. I can’t imagine what it would feel like losing a box when you’re new in this game. Two weeks of back and forths when you’re dealing with that kinda money just isn’t nice, especially as you don’t know if you’ll actually get the money back. In that case, it was in Amazon’s care by then. I’d packed everything perfectly. They just messed up, so blessed up my balance once their investigations were complete.

8. Get More Help

Sourcing. Vetting. Prepping. Repricing. Those are the four main parts to this business, so I need to be focused on what parts actually need more resources.

Sourcing. I couldn’t be happier with Tactical Arbitrage. It literally sweeps through websites and finds all the goodness within them, showing me where all of the profitable deals are. There’s always a chance that someone else might find the same deals though. That’s why manual sourcing is great to do, even though it takes up so much time. The only way to grow in this game is to find source more, so I’m going to train another virtual assistant for deal sourcing soon.

Vetting. As the person buying the deals, if I’m not going to pull the trigger on anything that I haven’t checked on Keepa first. It’s just not going to happen. Whether it’s mismatches on Tactical Arbitrage or Keepa reading that hasn’t been thorough enough, I need to minimise the number of products that linger in my inventory by changing my vetting game. It just comes down to better training and being stricter on myself and how my time I send doing it.

Prepping. I still prep everything at home and I like it that way. I haven’t heard particularly great things about UK prep services, aside from their work with private label sellers. I’m keeping everything in-house because it works. We’ve got a good thing going with the prepping these days. Basically, Hollie does all of it. It’s going to stay this way. No change for now.

Repricing.Bqool does all that I could possibly need it to. It’s out there in the trenches upping my prices when they competition falls back. It’s dropping them to within Buy Box proximity when other lames are cutting it down. (Want in? Go get Bqool here). I need to be a bit more sophisticated with a few of my products and how they’re being repriced, so I’m going to optimise those for the new year.

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- Chiino
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